HomeATM ePayment Solutions is shifting its focus to portable card readers that can be used with mobile phones.
The Montreal company has been promoting its SafeTPIN card-swipe and PIN-pad device that consumers can plug into home computers, and has modified that to create 12 prototypes it is showing to merchant acquirers, according to Kenneth Mages, HomeATM's chairman and chief executive.
The CircleSwipe device can be inserted into the audio jack of mobile phones, and acquirers would sell it to merchants.
HomeATM expects to ship 30 beta units in March and has priced an order for 250,000 devices for a large merchant services provider, Mages said, though he would not name it.
Mobile-phone card readers have been generating significant buzz in recent months, especially the reader from Square Inc., the latest venture by Twitter Inc. founder Jack Dorsey, which has developed a cube-shaped reader that attaches to Apple Inc.'s iPhone.
Mages said his company's SafeTPIN reader has always had the capability to work with mobile phones. "We filed a bunch of patents on the way we do it," Mages said.
The Payment Card Industry Security Standards Council certified SafeTPIN last year.
HomeATM has benefited from Square's buzz, Mages said, and companies that were once skeptical of SafeTPIN now are reaching out to discuss CircleSwipe.
The rubber, semicircular CircleSwipe device contains the same encryption technology as SafeTPIN. The technology encrypts the Track 2 data on cards' magnetic stripes.
(Track 2 data includes the card's primary account number and expiration date.)
HomeATM also has a patent pending on the technology powering the CircleSwipe; the device uses sound waves and the friction generated when cards are swiped to generate the power needed to encrypt the Track 2 data, Mages said, so it does not drain phones' batteries.
A number of observers have said consumers are reluctant to add peripheral devices to their computers for making online purchases.
However, Paul Turgeon, the president of Payments and Processing Consultants Inc., said the mood may be shifting.
"If I tell you there is a device that is guaranteed to protect your information when you shop online, I'm pretty sure that person will have no problem attaching another device to a computer," he said.
(Turgeon a decade ago headed NYCE Corp.'s initial SafeDebit venture, in which consumers could use a CD-ROM to enter their PINs when shopping online. It failed to capture market interest. NYCE is testing a software version of SafeDebit that creates virtual debit card data for one-time use.)
Mages said Square is helping the idea of portable card readers garner more attention. "Now an extra peripheral might be accepted," he said. "People seem to like [Square], and we're now getting vetted on a lot of different levels by a lot of different people who weren't taking my calls initially."
HomeATM already has other competition.
Besides Square, Mophie LLC and VeriFone Holdings Inc. have also announced card readers that can be used with Apple Inc.'s popular iPhone.
Turgeon said the creation and availability of multiple payment card readers for mobile phones boosts the concept's credibility. "The more, the better," he said.